Fundamental Truth

The tariff was the funding source for most of government for about a century.

Once upon a time there was no federal income tax. No estate tax. No gift tax. No payroll tax. No capital gains tax. And no corporate tax. Taxes we take for granted today didn’t exist a century or so ago. The country was a lot leaner back then. People kept most of their money. And took care of their families.

The federal government used to fund everything thing they did with tariffs. A tax on imports. Paid in ports. As ships unloaded their goods. Far away from most people. And few people complained. Our first excise tax was a different story. A 7 cent per gallon of whiskey incited the Whiskey Rebellion. After fighting the Revolutionary War to escape the oppressive taxation policies of Great Britain the people were in no mood for a new tax. The whiskey tax lasted for about a decade. Then they repealed it.

This left tariffs as the funding source for most of government for about a century. But even that grew controversial. And began the divisions between North and South. The North protected its industry with protective tariffs on iron products, textiles (wool and cotton) and agricultural goods. Shipped from the more industrialized Britain. Which Britain responded to with tariffs of their own. On cotton and other agricultural products grown in the South. So the more the North protected their industries the more difficult it made for the South to export their raw goods.

In 1913 the progressives reintroduced the income tax and taxed the rich at 1%.

This wasn’t the only difference of opinion the North and South had. And their differences resulted in war. The North was able to win the American Civil War with its expansive industry. But the war devastated the country. Especially the South. Which lost about 8.6% of her population. To get an idea of what an 8.6% population decline is consider this. That percentage of the current U.S. population is approximately 27 million. So the losses the South suffered were similar to what the Soviets lost on the Eastern Front during World War II.

The South may have lost more of its population. But the North suffered nearly the same number of war dead. She just had a larger population to begin with. To run all of that industry that won the war. America’s first modern war was a costly one. And one that President Lincoln had to turn to a new source of revenue. The federal income tax. Which taxed the rich. At 3%. Then it taxed the super rich at 5%. But after they paid down the war debt they repealed America’s first income tax.

Then came the progressives. And their taxes. In 1913 they reintroduced an income tax. Taxing the rich at 1%. And the super rich at 6%. To fund an expanding federal government. Then came World War I. To fund the war they increased the tax rate on the rich to 15%. And the super rich at 77%. The top marginal rate fell during the Twenties. But FDR raised it back up during the Great Depression. Until it reached 94%. Where for every dollar they earned in and above the top income bracket they got to keep only 6 cents.

Few would be able to write a check on tax day to pay their full tax bill.

Then came all the other taxes. And they just kept coming. Our tax bill grew to staggering amounts. Which posed a problem for the taxing authorities. As people just didn’t keep that kind of money around. They worked. They raised their families. And what little they had left they put into the bank for their retirement. Making it very difficult for them to pay their tax bill when it came. Especially when it was 30% or more of their entire income. So what to do?

The Founding Fathers created a nation out of a tax rebellion. And then when that nation levied its first excise tax they got a little rebellion of their own. Being opposed to taxes is part of the American DNA. So the taxing authorities had to somehow hide the large amount of taxes we were paying. That is, they had to reduce the transparency of these taxes. For if you don’t know what you’re paying in taxes you really can’t get mad at paying high taxes.

Enter the withholding tax. The greatest sin government ever perpetrated against the people. For it takes our money before we ever get it. Conditioning us to accept ‘net’ pay as the norm. And making ‘gross’ pay some meaningless payroll jargon. Because you can’t spend ‘gross’ pay. You can only spend ‘net’ pay. Which is the only pay people care about. Making it not only easier to hide the soaring amount of taxes people were paying. But because it’s so easy to hide what we’re paying they could raise those taxes to confiscatory heights. Because we never have that money in our hands. We never see it. It goes from our employer to the taxing authorities. Which is the only way they could collect these soaring amounts. For few would be able to write a check on tax day to pay their full tax bill. As people just don’t keep that kind of money around.

Week in Review

Anne Jarvis’ father, Andrew, is an architect that splits his time between his firm’s branches in New York City and Philadelphia. The commute became so overwhelming that he began to rent an apartment in NYC to improve his quality of life.

Upon further inspection of tax laws, Andrew learned that in order to avoid being taxed by New York, he would only be allowed to live in the city 182 days or less out of the year. In preparation for disputes against his living situation, he began taking selfies, as a way to prove to the taxman that he spends more time in Philadelphia, than he does in New York.

When a taxing authority taxes too much the natural inclination of free people is to move. And that’s what was happening in East Berlin. The best and brightest that drove the economy were walking across the street into the West. Leaving behind only the less-educated and the less-skilled. So to stop this brain-drain the communists built the Berlin Wall. To keep the best and brightest from going to where life was better.

Those on the left will read this story and call this architect greedy. For he enjoys the privilege of working and living in New York City part of the year. And should pay for that privilege. In particular so they can have more free stuff paid for by the best and brightest. But if New York starts taxing his income that doesn’t mean Pennsylvania will stop taxing his income. No. They both will tax his income. As if he’s two different people. That is, he will pay the taxes of two people. Is that fair? Would even those on the left call that fair? Of course if you suggest they should pay two cellular bills (theirs and somebody else’s) they would say, “Wait a minute. That is NOT fair.” But the architect? They’d probably say something like, “He’s rich. He can afford to pay the income taxes of two people. And should.”

Being rich is a relative term. It basically means anyone making more than you these days. So even people who win the lotto don’t consider themselves rich when it comes to paying income taxes. They’ll say that having to give almost half of their winnings to the taxman is unfair. But having two states tax this architect is fair. Because he can afford it. For he earns that every year. While they only won one lotto.

The way New York City is going they will have to build a wall around Manhattan if they expect to keep the best and brightest from fleeing their oppressive tax rates. Or they’ll have to get the federal government to tax all states oppressively high so people have no better place to go. Which explains why big-government liberals are all for expanding the power of the federal government. For their oppressive liberal policies won’t work if the people can move to another state to escape them.

Economics 101

There have been demonstrations to raise the minimum wage. President Obama even called for Congress to raise the federal minimum wage to $10.10 an hour. He also wants employers to pay salaried people overtime. There have been demands for paid family leave (paying people for not working). Unions want to organize businesses. To get employers to pay union wages. Provide union health care packages. And union pensions. Obamacare has made costly health insurance mandatory for all employees working 30 hours or more a week.

Environmental regulations have increased energy costs for businesses. Sexual harassment training, safety training, on-the-job training (even people leaving college have to be trained before they are useful to many employers), etc., raise costs for businesses. New financial reporting requirements require additional accounting fees to sort through. New complex and confusing regulatory policies require additional legal fees to sort through them and comply.

The Problem with Guaranteed Work Hours is that there is no such thing as Guaranteed Sales

The worst economic recovery since that following the Great Depression has created a dearth of full-time jobs. In large part due to Obamacare. As some employers struggling in the worst economic recovery since that following the Great Depression can’t afford to offer their full-time employees health insurance. So they’re not hiring full-time employees. And are pushing full-time employees to part-time. Because they can’t afford to add anymore overhead costs. Which is hurting a lot of people who are having their own problems trying to make ends meet in the worst economic recovery since that following the Great Depression. Especially part-time workers.

Now there is a new push by those on the left to make employers give a 21-day notice for work schedules for part time and ‘on call’ workers. And to guarantee them at least 20 hours a week. Things that are just impossible to do in many small retail businesses. As anyone who has ever worked in a small retail business can attest to. You can schedule people to week 3 weeks in advance but what do you do when they don’t show up for work? Which happens. A lot. Especially when the weather is nice. Or on a Saturday or Sunday morning. As some people party so much on Friday and Saturday night that they are just too hung over to go to work. Normally you call someone else to take their shift. Then reschedule the rest of the week. So you don’t give too many hours to the person who filled in. In part to keep them under 30 hours to avoid the Obamacare penalty. But also because the other workers will get mad if that person gets more hours than they did.

The problem with guaranteed work hours is that there is no such thing as guaranteed sales. If you schedule 5 workers 3 weeks in advance and a blizzard paralyzes the city you may not have 5 workers worth of sales. Because people are staying home. And if no one is coming through your doors you’re not going to want to pay 5 people to stand around and do nothing. For with no sales where is the money going to come from to pay these workers? Either out of the business owner’s personal bank account. Or they will have to borrow money. It is easy to say we should guarantee workers a minimum number of work hours. But should a business owner have to lose money so they can? For contrary to popular belief, business owners are not all billionaires with money to burn. Instead, they are people losing sleep over something called cash flow.

Cash Flow is everything to a Small Business Owner because it takes Cash to pay all of their Bills

To understand cash flow imagine a large bucket full of holes. You pour water in it and it leaks right out. That water leaking out is expenses. The cost of doing business (see all of those costs above). A business owner has to keep that bucket from running out of water. And there is only one way to do it. By pouring new water into the bucket to replace the water leaking out. That new water is sales revenue. What customers pay them for their products and/or services. For a business to remain in business they must keep water in that bucket. For if it runs out of water they can’t pay all of their expenses. They’ll become insolvent. And may have no choice but to file bankruptcy. At which point they’ll have to get a job working for someone else.

Cash flow is everything to a small business owner. Because it takes cash to pay all of their bills. Payroll, insurance, taxes, etc. None of which they can NOT pay. For if they do NOT pay these bills their employees will quit. Their insurers will cancel their policies. And the taxman will pay them a visit. Which will be very, very unpleasant. So small business owners have to make sure that at least the same amount of water is going into the bucket that is draining out of the bucket to pay their bills. And they have to make sure more water is entering the bucket than is draining out of the bucket to pay themselves. And to grow their business.

This is why business owners don’t want to hire full-time people now. Because full-time people require a lot of cash (wages/salary, payroll taxes, insurances, training, etc.). They’re nervous. For they don’t know what next will come out of the Obama administration that will require additional cash. For every time they want to make life better for the workers (a higher minimum wage, overtime for salaried employees, guaranteed hours, etc.) it takes more cash. Which comes from sales. And if sales are down future cash flow into the business will also be down. Leaving less available for all of those holes in the bucket. So they guard their cash closely. And are very wary of incurring any new cash obligations. Lest they run out of cash. And have to file bankruptcy. Which is why they lose sleep over cash flow. Especially now during the worst economic recovery since that following the Great Depression.

Week in Review

First it was alcohol and tobacco. Getting people hooked on these items to solve all of a state’s funding woes. Then it was the lottery. States needed to get their people hooked on gambling to solve all of their school funding needs. Then it was casino gambling. Because the lottery alone was taking enough money from the people to solve all of a state’s funding woes. And now it’s marijuana (see Colorado made $3.5 million in taxes and fees on first month of marijuana sales by Nick Allen posted 3/11/2014 on The Telegraph).

Colorado, the first US state to legalise cannabis for recreational use, made just over $2 million in tax revenue from selling the drug in January, according to its first officially released figures.

The amount was not far behind the $2.7 million the state recouped in excise taxes on alcohol in the same period and is expected to exceed that in subsequent months.

More than $14 million worth of the dug was sold over counters to recreational users in the 30 days after cannabis shops opened on Jan 1…

In Colorado the first $40 million in tax revenue will go towards school construction and Mr Hickenlooper wants additional revenue to be used for projects including anti-drug advertising aimed at children, campaigns against driving under the influence of cannabis, and public health projects.

Another $2 million taken away from the taxpayers. To add to the $2.7 million from alcohol sales. On top of what they got from tobacco sales. And what they got from the lottery. Each step down this road was supposed to be a cure-all. But it never was. For once they got a new tax it wasn’t long before they said they needed yet another new tax. Because the previous tax just wasn’t adequate to cover their spending. Which just begs the question. What are they doing with all of that money?

So we have people dying from lung cancer. We have people dying from liver disease. We have people becoming impoverished because they’ve gambled all of their money away. Now Colorado is going to turn a part of their population into potheads. Who will suffer the same ailments as tobacco smokers do. As well as suffering some lost cognitive ability. And some will end up wards of the state. Filling hospitals and nursing homes. Suffering from costly diseases. And yet the state cheers this new money. And dreams of future revenue as more people pick up this unhealthy and dangerous habit. Giddy at the thought of every new person lighting a marijuana cigarette for the first time.

The worst thing about the state using these people to fund their out of control spending is the regressive nature of these taxes. Alcohol, tobacco, the lottery, casino gambling and marijuana hurt the poor the most. Those who have the least money to spare now have to give more of it to the taxing authority. The very people these progressive-thinking people are supposed to help. Who instead use them for their selfish needs. And don’t care a whit about the lives they destroy.

Politics 101

Rich People are Cash Piñatas for Governments at all Levels to Whack Open

Politicians lie. It’s no secret. But because they tell people what they want to hear, the people often like these politicians that lie. And vote for them. Which is why politicians lie in the first place. To trick people into voting for them. For there is no other reason to lie during a political campaign. For that is the one and only thing they’re trying to do. Win. And you win by getting as many people voting for you as possible. But you don’t win by saying the current welfare state is unsustainable. No. You win by expanding the welfare state. And taxing the rich to pay for it.

Of course, when people complain about higher tax rates politicians immediately call them greedy. Rich selfish people who don’t want to pay their fair share. Though these selfish rich people pay the lion’s share of all tax revenue. Governments love having these rich people in their tax base. From sales tax to property tax to income tax, rich people are cash piñatas for governments at all levels to whack open. To fund their public sector pensions and retiree health care benefits. New York City LOVES having Wall Street and all those rich people in their city. Because they pour dump-trucks of money into city coffers.

Yet these are the same people government officials demonized as being greedy and unwilling to pay their fair share. And call them unpatriotic if they threaten to leave their high-tax locale. Because when a few of the top 1% earners leave millions of tax revenue leaves with them. Whereas if a few of the bottom 50% leave only a few thousand of tax revenue leaves with them. Not even enough to notice. No. Rich people are a government’s best friend. Yet governments treat them like pariahs. And lie about them not paying their fair share. Demonize them to gain political points. And to trick people into voting for them. Because their lies make it sound like they care.

There was a whole lot of Killing going on in the Americas before the Europeans first Stepped Foot in the Americas

But it’s just not politicians that lie. Most of those on the left lie, too. Our public school teachers, our university professors and the mainstream media lie, too. To help the political left gain and maintain their power. Kids today grow up learning that the greatest economic system in the world, capitalism, is the worst economic system in the world. These educators and the mainstream media brainwash our kids. Telling our kids that capitalism is bad. And government intervention in the free market is good. Like in socialism and communism. Where they put people before profits. And yet the mass of immigration has and always will be from nations that favor socialism and communism to nations that favor capitalism.

To help further this lie that the system that made America great is bad they teach these kids that America is not great. Because of capitalism. Which put profits before people. That this nation was founded by rich white men for rich white men. Despite this country of, and for, rich white men being the destination of choice for the tired, poor, huddled masses yearning to breathe free who left their wretched and capitalism-free shores to come to America. It was greedy white Europeans who came to America. Whole stole this land from the Native Americans. And then brutally waged war against these peace-loving people. Who were anything but.

The Native Americans were hunters and gatherers. They didn’t raise cattle. They traveled great distances to find and hunt buffalo. Hunters and gatherers need huge tracts of land. Unlike farmers who can make a small plot of land productive. Which created a permanent state of war in the Americas. For when these tribes bumped into each other trying to hunt the same food they fought each other. That’s why they called the most esteemed Indians ‘warriors’. Those who proved their courage in battle. By killing brave warriors in other tribes. There was a whole lot of killing going on in the Americas. Both in battle. And in human sacrifice. The Pawnee practiced child sacrifice in North America. To please their gods. As did the Aztecs. Who killed people wholesale on their pyramids in Central Mexico. And the Inca. Who drugged their children with coca leaves and alcohol before taking them to a mountain top. Where they then strangled them to death. Killed them with blunt force trauma to the head. Or simply left them to die of exposure. And all of this was happening before those greedy white Europeans first stepped foot in the Americas.

The History of the World is one of Brutal Military Conquest and State Oppression

Those on the left blame Islamist terrorism on America. And their imperialist ways. Often citing the 1953 Iranian coup d’état as the prime mover. A coup executed by the British with American help. Why? It’s a complicated story. The British found oil in Iran. The British needed this oil to fuel their war machine during two world wars. As did their ally during World War II. The Soviet Union. Iranian oil fueled the Red Army. And Iran provided a corridor for American supplies to reach the Red Army. After the war the Allies began pulling out of Iran. But not the Soviets. Who liked that oil. And wanted to keep it. Not to mention having a warm water port for their navy. And it wasn’t the first time the Russians came south looking to take Iranian land. The deals the Iranians made with the British before the war were in part to check the Russian advance into their lands. The Soviet interest in Iran was what got the British to convince the Americans to join them in their coup. For the Cold War was on and the Soviets were already in Eastern Europe. They tried extending into Greece and Turkey but failed. And here they were testing the waters in Iran.

The British suffered through two world wars. She lost her empire in the first one. And nearly lost their existence in the second one. But they held on. Poland, Norway, the Low Countries and France fell. Leaving the British alone. Until the Japanese bombed Pearl Harbor bringing the Americans into the war. And the Nazi invasion of the Soviet Union. Allowing the British to go onto the offensive. Thanks to the Royal Navy. And the sea lanes they kept open to Iran. Allowing the free flow of oil that defeated Nazi Germany. Oil that they invested a fortune to get. Which brings us back to the coup. The Iranians wanted a bigger slice of the oil profits pie. The British refused. Because the war had devastated their economy. And they were struggling to rebuild. Without ceding any ground to the new threat in town. The Soviet Union. So the British weren’t feeling particularly generous with the profits on that Iranian oil. So the Iranians started whispering the dreaded ‘N’ word. Nationalization. One thing led to another and, well, the British put an end to all of the nationalization talk.

It may have not been a nice thing that the British and the Americans did to the Iranians. But there’s been a lot of that going on throughout history. A history of brutal military conquest. And brutal state oppression. Sumer was one of the first great civilizations. But it’s not here anymore. Having been replaced by the Assyrian and the Babylonian empires. Which were replaced by the Persian Empire (Persia is present day Iran). Which was conquered by the Greek Empire. Which was displaced by the Roman Empire. Which was replaced by the Byzantine Empire. Which fell to the Ottoman Empire. Which fell to the Allied Powers in World War I. Which brought the British into Palestine. Thanks to the League of Nations. Which also called for a Jewish homeland in Palestine. The seed of the Israeli-Palestinian conflict. Arab nationalism. And the Soviet Union allying with the Arab nations against the United States and Israel. Fomenting anti-American sentiment in the Muslim world. To help the Soviets win the Cold War.

Geopolitics is complicated. And brutal. Where war, oppression, slavery, genocide, human sacrifice, etc., were the norm throughout history. Where there were but brief periods of peace. Like the Pax Romana. About 2 centuries of world peace under the Roman Empire. The Pax Britannica. About a century of world peace under the capitalist British Empire. And the Pax Americana. A period of world peace following World War II thanks to capitalist America’s role as a superpower. Where they used that super power for good far more than it was used for bad. But our schools teach our kids that Britain and the United States are just nations founded by rich white men for rich white men. While the Native Americans and the Muslims that conquered countless people to build empires are the true peace-loving people. And gloss over the parts of world conquest. And human sacrifice.

Week in Review

Before the Americans declared their independence from Great Britain they tried to reconcile their differences with Great Britain. For many believed Great Britain had the greatest form of government in the world. A constitutional monarchy. The form of government that vaulted the British Empire into a superpower. And gave her people more rights and liberties than any nation in the world.

The Americans, rather, the British Americans, were proud to be British. And would have remained proud members of the British Crown had it not been for the immense cost of the Seven Years’ War. That the Parliament tried to pay for by taxing the American colonists. For all the British Crown did to protect the Americans from the French and their Indian allies. Not asking for much, really. But the British taxpayers in Great Britain had representation in Parliament. And had a say in that taxation. But the British living in North America were not given that British right. Which was the source of all the friction between the British Americans and Great Britain. And what brought them to war.

Some of the fighting in the American Revolutionary War was brutal. But the worst of it was between Patriot and Loyalist. American against American. In the civil war that raged in the South. Which is why the United States and Great Britain resumed relations following the war. There had plenty of issues but the post-war relationship was far better than any other nation that fought a civil war. Why? Because there is a Special Relationship between the British and the Americans. We come from the same stock. We share the same values. And traditions. The countries around the world that were once part of the British Empire are some of the most advanced nations in the world. And their people have some of the greatest rights and liberties in the world today. All because of our British past.

We may never bow to British Royalty again. Because of our history. But we can embrace the Royal Family. Just as the British do. For it is their tradition. And a deep part of their glorious history. As it is ours. So we welcome the future king into the world. We wish the best for him and the Royal Family. And the British people. Joining them in spirit when they shout God Save the King (see America’s embrace of the Royal Family demonstrates the enduring strength of the Special Relationship by Nile Gardiner posted 7/23/2013 on The Telegraph).

Despite the lukewarm and often insulting approach of the Obama administration towards Britain over the past four and a half years, the Special Relationship between the United States and Great Britain remains extraordinarily strong in terms of defence, intelligence, cultural and trade ties, and is uniquely important to the American people. No other nation in the world holds a place in American hearts as special as Great Britain. And Americans hold an overwhelmingly positive view of the British Royal Family. The most recent poll conducted in the United States on the British Monarchy – a CBS/New York Times poll back in April 2011 – showed that 71 percent of Americans believe the Royal family “is a good thing” for the British people, with only 15 percent against. In the same poll, the Queen held a 61 percent approval rating, at the time about 15 points higher than that of the US president.

There are defeatists who argue that Britain hardly matters anymore to the world’s superpower, and that the UK can only maintain influence in Washington through the lens of the EU. The huge US interest today in events thousands of miles away in London, and the tremendous support for the Royal Family suggests that the Special Relationship is far from dead. With good reason Americans admire the British for their uncompromising defence of tradition, their warrior spirit, and their willingness to uphold national sovereignty.

Britain matters. And if the Eurozone collapsed as well as the EU they will matter more. Thanks to Margaret Thatcher. Who reversed their slide into Socialism. Unlike other European nations. And of late, the United States. Sadly.

President Obama insults our greatest friend and ally because Britain bucks the socializing of Europe. Britain is often the lone rational voice in the European Parliament. Currently that voice belongs to Daniel Hannan. Who knows the history of Britain. The United States. And our Special Relationship. Which is conservative. Not liberal. Which is why the Special Relationship is anathema to a liberal like President Obama.

God save the future king. The queen. The United States of America. And our Special Relationship.

Week in Review

President Obama couldn’t get Congress to pass a carbon tax (aka, cap and trade) into law to increase the cost of electric power. So he is going to use his regulatory powers to increase the cost of electric power (see Obama directs EPA to end dumping of carbon from power plants by Steve Holland posted 6/25/2013 on Reuters).

President Barack Obama said on Tuesday he is directing federal regulators to develop a plan to end the “limitless dumping of carbon pollution” from U.S. power plants.

Translation? President Obama is directing federal regulators to increase the cost of your electric bill.

Carbon dumping? They make it sound like these power plants are driving down country roads in the dead of night and pouring carbon out of barrels over the pristine wilderness. But it’s just the smoke coming out of smokestacks. Most of which is scrubbed clean these days. Thanks to previous costly regulations. What’s next? Breathing tests to calculate how much carbon we dump each year? So they can tax our breathing, too? Because we exhale a greenhouse gas? Of course, with Obamacare that won’t be so hard to do. As the government will have their fingers in our medical records.

Beware buying your electric car. That is, if you think it will be less costly than paying for very expensive gasoline. First of all, one of the reasons why gasoline is so expensive is because of the taxes the government tacks on to the price per gallon. Which is supposed to maintain our roads. Of course that’s hard to see these days with our crumbling infrastructure. They are collecting a ton of money. But where it goes is another question.

Now that we have moved into more fuel efficient cars and electric cars and hybrids what is our thanks? They want to put a black box in our car to track the miles we drive. So they can tax us per mile. Because we’re not buying enough gasoline to maintain the roads. Or so they say. So even though we’re saving money by buying less gas we’ll probably end up paying more to drive in the long run when they start taxing us per mile. Giving electric car owners no advantage for sweating bullets wondering if they have enough charge to get home. For they’ll be paying as if they are driving a big gas-guzzling car that gives them no range anxiety. But all they’ll get is the range anxiety. And it now will get worse.

Never buy gas again. That’s what they told us. And we shouted, “Hurrah!” And, “Take that you greedy oil companies.” While those who bought electric cars thought they would plug in anywhere for free. But electric power isn’t free. It costs. You will see it in your electric bill as you plug in overnight. You will see it when you have to swipe a card to use a charging station away from home. And thanks to President Obama’s directing federal regulators to increase the cost of producing electric power you will see how costly driving an electric car can be. Even when it buys no expensive gasoline from those greedy oil companies.

The tough fuel economy standards? The hybrids? The electric cars? None of them were about us saving money. It was about making us do things we didn’t want to do. And now that we have what is our reward? Higher electric bills. And a lower standard of living. As more of our paychecks will go to pay for the government’s intrusion into our private lives.

Week in Review

The Emissions Trading Scheme (ETS) was the European Union’s (EU’s) way of combating global warming. By making carbon emitters pay for their carbon emissions. But Europe is mired in recession. And the Eurozone is suffering a sovereign debt crisis. Which hasn’t helped to pull Europe out of recession. And it appears that the economic reality in Europe is dooming the ETS (see If Carbon Markets Can’t Work in Europe, Can They Work Anywhere? by Bryan Walsh posted 4/17/2013 on Time).

But the ETS—and carbon trading more generally—is not doing well, and its problems are taking some of the green shine off of Europe. Since its launch the ETS has struggled, with the price of carbon falling as the 2008 recession and overly generous carbon allowances undercut the market. In the ETS business are given free allowances to emit carbon—too many free allowances mean they don’t need to reduce their carbon emissions much, which erodes the demand for additional carbon allowances on the market and causes the price to drop. Prices fell from 25 euros a ton in 2008 to just 5 euros a ton in February. There was a way to fix this—take 900 million tons of carbon allowances off the market now and reintroduce them in five years time, when policymakers hoped the economy would be stronger and demand would be greater. As anyone who’s taken Econ 101 would know, artificially reducing the supply of carbon allowances in such a drastic way—something called “backloading”— should force the price back up.

But on April 16, the European Parliament surprised observers by voting down the backloading plan. In turn, the European carbon market collapsed, with the price of a carbon allowance falling by more than 40% over the day. “We have reached the stage where the EU ETS has ceased to be an effective environmental policy,” Anthony Hobley, the head of climate change practice at the London law firm Norton Rose, told the New York Times. The ETS is a mess.

Backloading failed because even in very green Europe, economic concerns seemed to trump environmental ones. European Parliamentary members worried that any action that would cause the price of carbon to rise would add to European industry’s already high energy costs.

This should make China happy. For there was no way no how they were going to pay for the carbon emissions from their airplanes entering European airspace. In fact they warned they would cancel their Airbus orders and give them to Boeing if the Europeans tried to force them to help bail out the Eurozone in their sovereign debt crisis. For this was what the ETS would ultimately do. Transfer great amounts of wealth from the private sector to the public sector. Which would have gone a long way in helping the Eurozone to continue to spend money they don’t have.

The ETS was nothing but a new tax on business. Cloaked in the guise of making the world a better—and greener—place. But the EU is suffering economically. A large part of the sovereign debt crisis is due to having less economic activity to tax. So the EU needs to improve the economy. So they can generate more tax revenue from the current tax rates. But increasing taxes on the carbon emitters will not help businesses. It will only increase the cost of business. Increasing their prices. Making them less competitive in the market place. Reducing their sales. And killing jobs. Which will generate even less tax revenue from the current tax rates.

The problem in the EU is not global warming. Or insufficient tax revenue. They have a spending problem. This is what caused their deficits. That gave them their soaring debt. Just like every other nation that ever suffered a debt crisis. Including the U.S. Trying to fix a spending problem with more taxes just doesn’t work. Only a cut in spending can fix a spending problem. It’s not like the old chicken and egg question. Excessive and unsustainable spending always comes before a debt crisis. Always.

Week in Review

There is no such thing as a free lunch. We’ve all heard this expression. And we know what it means. Vendors buy customers lunches to get more business. And customers know whatever they get ‘free’ from a vendor is included in the price they pay for their products or services. So nothing is free. Just other people pay for things you get to enjoy.

A lot of people thought national health care was free health care. Which is why they want it. Because they can’t stand paying even the co-pays on the high cost of health care. But by nationalizing health care those high costs don’t go away. Because doctors and nurses just don’t start working for free. No. We pay for free health care by nickel and diming everyone everywhere we can (see Taxes heat up battle against ‘Obamacare’ by Tom Howell, Jr., posted 4/3/2013 on The Washington Times).

A tax on everything from X-ray machines to oxygen tanks took effect at the beginning of this year — one of about 20 taxes and fees included in President Obama’s health care law — and has emerged as the central battleground in the fight by the law’s opponents to repeal parts of the president’s overhaul…

The device tax is one of several that kicked in this year, along with higher taxes on investment income and an increase in the Medicare payroll tax among households making $250,000 per year. Taxes and restrictions on flexible savings accounts, health savings accounts and health reimbursement arrangements are also starting to bite.

The tax penalty imposed on those who refuse to obtain health coverage will kick in next year, with a minimum penalty for low-income individual taxpayers of $95 in 2014, rising to $325 in 2015 and $695 in 2016. Those with higher incomes will end up paying more because their penalty is based on a percentage of their income — 1 percent in 2014, 2 percent in 2015 and 2.5 percent in 2016 and beyond.

And still looming later this decade is a 40 percent excise tax on high-value “Cadillac” health insurance plans, which will not debut until 2018.

The health care law’s $1 trillion in revenue raisers also includes niche targets, such as a 10 percent assessment on indoor tanning services…

…the health insurance tax, an annual fee that taxes health insurance providers relative to the worth of the insurance premiums they collect each year.

They will tax us every chance they get. Because ‘free’ health care is more costly than the kind you pay for out of pocket. Because when it’s ‘free’ you will use it more often. “If it’s free it’s for me.” And because the consumption of health care resources will rise so will all of these new taxes as they scramble to find a way to pay for this ‘free’ health care.

A lot of people no doubt draw some comfort in the fact that the rich will pay the majority of these taxes. But all of these taxes will eventually filter down to the average American as businesses raise prices to cover these taxes. And those “Cadillac” health insurance plans? They’re just not for rich people. Very sick people often spend a fortune on these plans to reduce their overall costs of their treatments. Which means the 40% tax on these plans will make these plans unavailable to them. Causing great upheaval in their lives as they transition from their private plan and doctors to the state plan and doctors.

Eventually the costs will grow greater than all this new tax revenue. As it has in the United Kingdom. Where they have had to turn to cost cutting, consolidation of health care clinics and hospitals, longer travel distances to see a health care provider, longer wait times, rationing and denials of health care treatment. Because their ‘free’ health care grew so costly with their aging population that they just can’t treat everyone. Patients sometimes have to wait an hour or more for an ambulance. And wait another hour or more at the hospital before a bed opens up for them so they can be unloaded from the ambulance.

And then there’s the Liverpool Care Pathway for the Dying Patient. A quasi death panel. Basically unplugging a patient to let them die with dignity. Sometimes without telling the patient’s family about this hospital decision. Where critics say it’s more about freeing up limited health care resources than about dying with dignity. Especially with a costly and aging population.

So this is our future with Obamacare. As the government takes over health care taxes will rise further. And quality will fall. As they try and stretch those limited resources to cover more and more patients. Especially with a costly and aging population.

Week in Review

The stoners, the high school and college kids and the baby boomer-hippies of yesteryear are ecstatic about Colorado decriminalizing marijuana. For now they don’t have to sneak around and buy their weed from some shady drug dealer. No, today they can walk down the road any time and walk into Harry’s and hold their head up high and say in a loud steady voice, “Harry, I want you to sell me some marijuana. In fact, today I think I’ll have some Acapulco Gold, for I am a Coloradan. But people in other states? They cannot. Because their states have never made the great leap out of the Middle Ages and the domination of alien Episcopal supremacy.”

(Okay, so I borrowed a little from Monty Python’s The Meaning of Life. And by a little I mean a lot. From the scene where the Protestant goes on about being able to buy condoms unlike his Catholic neighbors. You can see a clip of that scene here but be warned. It is not appropriate for the workplace. And not suitable for young children. If you’re not a man-boy with a somewhat sophisticated yet sophomoric sense of humor you may find this scene somewhat offensive. But if you are go and buy the two-disc collector’s edition for your personal collection. So you, too, can impress your friends by quoting these scenes verbatim. Or alienate everyone around you. Depending on who your friends are. But I digress.)

Where was I? Oh yes, Colorado has solved all of their problems. They’ve decriminalized marijuana so responsible adults can enjoy this drug responsibly while no kids will. (Yeah, right. Pull the other.) And they’ve figured out a way to bring more money into the state treasury by encouraging people to smoke marijuana. Even though they frown on people smoking regular cigarettes. And pretty much banned cigarette smoking everywhere. For that stuff can get into your lungs and kill you. First-hand smoke. Second-hand smoke. Even third-hand smoke. That ashtray smell left behind long after a smoker extinguished his or her cigarette. So Colorado is serious about the harmful effects of smoking tobacco. Unless it gets you high. Then apparently the smoke isn’t that bad for you after all. But just don’t dare light up a cigarette in public anywhere in Colorado. But if you do, to be safe and save yourself from the judgmental stares of others just make you regular cigarette look like a marijuana joint. And then you can light that up anywhere and everyone will be cool with you. Apparently.

So Colorado is doing the responsible thing for responsible adults who will now all follow the letter of the law. Even though they used to violate state and federal law before Colorado decriminalized marijuana. Which was and still is classified as a schedule I controlled substance. Along with heroin and cocaine. Which carry some pretty stiff penalties if you’re caught carrying. So these people were willing to break a law that carried stiff penalties when the drug was still illegal. But that shouldn’t be a problem now that it’s legal (see Tax, and tax again: America’s first market for recreational marijuana will be far from free posted 3/9/2013 on The Economist).

FREE-THE-WEED campaigners speak not of “legalising” marijuana but of “taxing and regulating” it. True to their word, the ballot measure they placed before Colorado’s voters last November, which won the support of 55% of them, was called the Regulate Marijuana Like Alcohol Act and contained provisions for a 15% excise tax. Now that the law is taking shape, the signs are that one of the world’s first fully legal marijuana markets (Washington state also backed legalisation) will have all the taxes and rules anyone could have wished for…

Most importantly, the group wants to maintain, for three years, the “vertical integration” model that has governed Colorado’s medical-marijuana industry. Under this system retailers must grow at least 70% of the dope they sell. This forces licence-holders to master a suite of skills from cultivation to distribution. The task-force also suggests that for the law’s first year, only established medical-marijuana dispensaries should be granted retail licences. Some campaigners mutter about protectionism, though grudgingly admit that dispensaries deserve some reward for their pioneering (and risky) work.

Mr Finlaw admits that vertical integration makes it hard to apply the excise tax: licence-holders will have an incentive to undervalue their product. That may help explain another proposal: to slap a tax on marijuana sales, on top of existing state and local sales taxes and the proposed excise tax. No figure will be presented to the legislature, but an “example” of 25% was floated in hearings.

Regulators say they need the funds to enforce their rules. But set taxes too high, fear campaigners, and you leave the illegal market in place, which destroys one of the principal purposes of legalisation in the first place. Either way, any new taxes will have to be approved again by Colorado’s voters, probably in November.

With that level of taxation it is unlikely to make it any less expensive than the weed they used to buy. And now that the penalty for buying ‘improper’ marijuana may be only as severe as being caught with cigarettes on you purchased in a low-tax state. Unless you have a tractor trailer full the punishment will be a slap on the wrist. When Canada raised their cigarette tax drug dealers turned to smuggling cigarettes. Just as lucrative. With far less risk. Yes, the illegally imported marijuana may sell at a lower price than in the past but with it being legal they will be able to make up for a lower profit per sale on volume. Because a lot more people will be smoking marijuana now. Besides, a lot of those kids will not be able to walk into Harry’s. They’ll still need to buy their stuff on the black market.

Over-tight rules create opportunities for and cosy relationships between the industry and regulators. But Colorado’s legislators must perform a balancing act, because they are being watched by the federal government. Marijuana remains illegal under federal law…

Some members of the prohibition industry are running out of patience. On March 5th the president of the International Narcotics Control Board, an arm of the UN, said that marijuana legalisation in America violated international treaties and threatened public health.

Ironic, really. It’s the Left that is pushing for the decriminalization of marijuana. Despite their relentless assault on Big Tobacco and making it pretty much illegal to smoke a regular cigarette anywhere outside your home or car. And they’re closing in on those, too. If you have children. Because of that third-hand smoke. It is also the Left that wants to keep ceding power and sovereignty to the United Nations. And here they are. Violating an international treaty of that august body that they hold so dear. Go figure.

The Left is an inscrutable bunch. With politics driving their every action. They champion individual liberty when it comes to sex and drugs but want to put you in jail for smoking a legal cigarette. Because smoking is bad for your health. Unless that smoke is from marijuana. Then it’s no big deal. They want a big world government to pass environmental regulations they can’t pass in their own country to regulate and punish capitalism but then ask who does the UN think they are telling them they can’t violate a treaty they don’t like? Like decriminalizing a schedule I controlled substance?

Individual liberty for those who think like them. And oppressive and punishing regulations for those who don’t. This is the political Left. Which is also the way things were in an absolute monarchy. A totalitarian fascist, Nazi or communist regime. An Islamist theocracy. And any other oppressive regime where those in power lived by a different set of rules than those who they ruled over. Despite expressing equality and egalitarianism it was more times than not like life for the poor animals on George Orwell’s Animal Farm. Where everyone was equal. Only some were more equal than others.